US economy: Ben Bernanke to give high profile speech

[Gerald]

The head of the US central bank, Ben Bernanke, is preparing to give a key speech that will be closely watched by markets for any hint of new stimulus.

He will speak at a meeting of central bankers in Jackson Hole, Wyoming.

Last year, his speech paved the way for $600bn (£368bn) of quantitative easing - injecting cash into the financial system to try to boost the economy.

This year, with the US again slowing sharply, markets are speculating that further QE may be round the corner.

Market anticipation:

Shares have rallied all week in anticipation that the Federal Reserve will act to reinvigorate the US recovery.

Earlier this month, stock markets plummeted as economic data pointed to sluggish or virtually non-existent growth in the US and Europe.

"Recent events have made it blatantly clear that the economy is in a funk," says Paul Dales, senior US economist at Capital Economics.

"The housing market remains at rock bottom and even the manufacturing sector, which had been the shining light of this recovery, has come off the boil."

Gold also hit a new record high on Tuesday, before falling back as stocks rallied.

Investors see gold as a haven in times of economic uncertainty, and QE is expected to depress the value of the dollar versus gold, which also makes the precious metal more attractive.

http://www.bbc.co.uk/news/business-14644827

Note: 26 August 2011 Last updated at 12:48 GMT